Renowned Professor of Petroleum Economics, Wumi Iledare, has said domestic refining should serve as the basis of Nigeria’s fuel supply. According to him, this approach will improve energy security, reduce vulnerability to currency fluctuations and maintain more economic value within the country.
Their argument becomes relevant in light of the increase in oil imports into Nigeria during June and July 2026, as highlighted in the NMDPRA fact sheet.
Professor Iledare noted that the increase in oil imports, despite significant domestic refining capacity, presents a considerable challenge in the downstream market. A nine percent increase in imports stood out, reaching 19.7 million liters per day in July, along with a decrease in domestic consumption. This situation raises questions about market efficiency, competitiveness and Nigeria’s progress in its transition from import dependence to domestic refining.
“Domestic refining should become the foundation of Nigeria’s fuel supply, improving energy security, reducing exposure to currency pressures and retaining more value within the economy,” he said. However, he emphasized that domestic production should not be isolated from competition or guaranteed market access, regardless of cost, quality or reliability.
Iledare acknowledged that imports remain essential when they provide better value, fill supply gaps or serve as a credible alternative to domestic suppliers.
He commented on Dangote Refinery’s option to export excess gasoline, noting that persistent imports could lead to demand uncertainty, inventory risks and production planning challenges.
He explained that exporting locally refined gasoline and continuing to import it illustrates a coordination problem in the market. He warned that if domestic refiners are unable to compete due to inconsistent regulations, price distortions, infrastructure challenges or preferential treatment for imports, Nigeria risks missing out on the benefits of its growing refining capacity.
According to Iledare, the appropriate policy response should not be to eliminate imports or protect domestic refineries from competition. Instead, he advocated for a transparent, rules-based market where both imports and domestic refining can operate.
He stressed the importance of keeping access to imports open to ensure competition and avoid power in the domestic market. At the same time, domestic producers should compete based on price, quality, reliability and supply performance.
He believes that regulation should prioritize compliance with safety and quality standards, ensure transparent pricing and import procedures, prevent anti-competitive behavior and address bottlenecks in infrastructure and logistics, rather than directing market outcomes or favoring specific suppliers.
“The central policy question is not whether Dangote should compete with importers. It is whether Nigeria can create a competitive framework where domestic refining effectively supplies the market and imports remain available to regulate prices and address deficits,” he said. “Such a framework would support energy security, affordability, investment and national value creation without sacrificing competition.”
Iledare concluded by stating that the success of subsequent deregulation should ultimately be evaluated not only by the volume of domestic refining or imports, but by the public value generated. The key measure is whether market competition leads to a net welfare gain for Nigerians through reliable supply, competitive prices, reduced economic vulnerability and increased domestic value creation.
He warned that when policy distortions inflate costs, restrict competition, or transfer benefits without corresponding public value, the result is a loss of welfare, regardless of whether gasoline is refined domestically or imported.
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